Igaming in Europe: Navigating evolving regulations with Playtech

“Emerging European markets present significant growth opportunities for igaming companies as they transition to a licensing regulatory model.

“Companies must navigate diverse regulatory landscapes, requiring significant operational changes. However, despite these challenges, factors such as growing economies, high digital adoption, and the shift towards regulated markets drive growth in these regions, making them attractive for igaming expansion.”

Europe’s igaming state of play  

The global igaming market is estimated to bring close to US$150 billion in gross win in 2024, with a projected annual growth rate of 10.7%. By 2029, the market is projected to reach almost US$250 billion. Europe currently accounts for approximately 40% of the total global market and the size of the market is projected to grow further as more jurisdictions legalise and regulate online gambling. 

While some markets are yet to be regulated, and black-market operators still accept bets illegally in regulated jurisdictions, most European countries have regulated or are in the process of regulating igaming.

The challenges

While regulation brings considerable benefits such as safer gambling, fairness, data protection, and tax revenues to the community, it also imposes challenges to stakeholders such as operators, industry service, and technology providers.

In aiming to enhance player protection or to surpass the standards of the latest regulating or neighbouring jurisdictions, instances of overregulation have emerged. The question arises: Is this overregulation translating into better and more efficient player protection measures, or is it falling short of its underlying objective?

Remaining competitive in a restrictive environment

Player acquisition has always been one of the most challenging, costly activities for igaming operators, who need to differentiate their brand in a very competitive market through high advertising costs, bonuses and promotions. 

Hogan explains, “The regulatory environment in Europe significantly impacts customer acquisition costs and retention strategies for igaming companies. Strict limitations on advertising and promotional activities hinder customer acquisition and brand visibility, increase the cost of attracting new customers through common channels and affect player awareness of legal sites.” 

Navigating through advertising restrictions

Acquisition challenges become even greater in regulated markets, as operators must navigate through strict advertising and marketing guidelines while adhering to compliance restrictions. Regulators often limit targeted advertising and bonuses, which are key means of attracting new players. However, Hogan believes that operators can navigate advertising restrictions through innovation and creativity. 

“Stringent advertising restrictions in countries like Italy and Spain significantly impact the marketing strategies of igaming companies, requiring them to rethink their approaches beyond traditional methods. These bans affect the market overall, though the degree varies across operators.

“Companies must adjust by exploring alternative channels to remain visible within the permitted scope, focusing on personalised marketing and loyalty programs for existing players. In mature markets, where most operators and brands are already well-known, the challenge is not in trying to establish their presence but developing innovative strategies to maintain brand visibility and customer engagement whilst complying with the restrictions.”

Remaining profitable amidst higher regulatory costs

Igaming operators in regulated markets face higher operational costs, including licensing fees and taxation and country specific technical requirements. There are varying tax rates and license fees across European countries, that can impact market entry decisions.  

“High tax burdens, which can include multiple types of taxes, put pressure on profit margins and can lead to reduced investments or even operators exiting a jurisdiction. As more jurisdictions regulate online gambling through licensing regimes, companies must strategically choose market entries, often focusing on those with more favourable tax conditions.

“The trend of increasing gambling tax rates affects profits, and while compliance costs cannot be cut, the impact on profitability can influence other business areas. High tax rates and costs also affect the value offered to customers, including their potential winnings and the variety of products available, leading some operators to hand back licences.” 

She adds that regulatory costs often lead to cost-cutting measures that can affect competitiveness, such as reduced odds and bonuses, and restrictive player protection measures, which are intended to safeguard players, and may not always achieve their intended outcomes. Navigating this complex regulatory landscape requires igaming companies to be highly adaptable and innovative to stay compliant and competitive.

The opportunity

Despite the challenges regulated markets present huge opportunities to igaming stakeholders. Regulated markets bring with them much greater player trust where engagement with licensed platforms opens the door to sustainable growth and investment in a long-term market presence. 

Sustaining growth

Hogan believes regulated markets present opportunities for igaming operators and providers to tailor solutions for a unique jurisdiction, form meaningful relationships with local stakeholders, and work closely with regulators to create market sustainability.  

“Igaming companies can work with regulators to develop responsible gaming initiatives by leveraging data and technology to enhance player protection. This involves showcasing how advanced analytics can identify and mitigate risks for individual players rather than relying solely on blanket measures.

“Early and transparent engagement with regulators, combined with ongoing research and collaboration, ensures that initiatives are both effective and adaptable. By focusing on tailored interventions that protect all types of players, companies can balance consumer protection with commercial success, fostering a safer and more sustainable gaming environment.”

She adds that strong partnerships with gaming providers and operators play a crucial role in expanding into new European markets by bringing local expertise and cultural insights that complement the experience of international providers. “At Playtech, these partnerships have proven effective. Additionally, such collaborations enable cost-sharing in key areas like marketing, technology infrastructure, and compliance, thereby reducing individual company risk and facilitating smoother market entry and operations.”

Navigating the transition

Hogan highlights that in order to succeed in countries transitioning from grey markets to regulated ones, igaming companies should engage early and constructively with key stakeholders, ensuring they are part of the regulatory discussions as they take shape. 

“They should not assume a smooth market entry, as challenges with player base and advertising can arise. Companies need to prepare long-term business plans, despite the short-term focus of political decisions, and be aware that compliance and market costs may increase.

“Early compliance preparation is crucial to avoid pitfalls in a new market. Additionally, building a strong brand and engaging in educational campaigns can help establish trust and credibility with new customers.”

Intro into new product verticals

There are verticals that are lacking in igaming regulated markets, due to various reasons.

“Igaming verticals, such as live casino, virtual sports and peer-to-peer betting, esports, remain underdeveloped or missing in the European market like online casino and live casino are absent in France and Portugal, respectively, while poker is not fully open to international liquidity. And it is challenging to introduce new games to some market.” 

These gaps can stem from regulatory frameworks that were not designed with future-proofing of an innovative industry in mind. Where there is room for dialogue to introduce these verticals where legislation allows, that’s great but it is not always the case.  Ultimately this, reflects on the diverse regulatory landscapes across Europe. However, she sees this product gap in the marketplace as an opportunity. 

“As the industry continues to evolve from land-based to online and now to mobile and app-based platforms, operators must diversify their offerings to cater to these new customer preferences. This includes developing tailored experiences for players who have grown up with the internet and mobile technology, ensuring that all types of players are engaged and satisfied. By staying attuned to these trends, igaming operators can expand their market reach and enhance their competitive edge.”

Moving forward towards common objectives

After more than a decade of working with European regulators, Hogan believes that policy solutions should focus on establishing common objectives and high-level baselines, particularly in player protection. “While there has never been consensus for an EU-wide framework, existing EU legislation does apply to gambling, and there are significant similarities in regulatory approaches and requirements.”

But she believes, the future of the igaming industry in Europe looks promising. “Harmonising technical requirements, such as certifications, audits, and reporting standards, would also be beneficial. It’s important to address not only the regulatory environment but also the technical implications By fostering these discussions, a more streamlined and efficient regulatory landscape can be achieved. Improved efficiency helps industry and regulators devote more docus to player protection.”